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UBB - Equipment Valuations

There are a number of ways of putting a value on your equipment and leasehold improvements. Here are three of them:

1) Replacement Cost This is typically required by insurance companies and represents the cost of replacing the equipment.
 
2) Book Value This is the amount your accountant has placed on the equipment after maximuizing your tax position. Any depreciation or amortization recorded by your accountant is added back to the net cash flow when valuing a business.
 
3) Current Fair Used Market Value This is the value of your equipment given its condition and use that could be realized on the open market. Good well maintained equipment is valued a bit higher because it is in place. Any value that your equipment brings due to the fact it is employed is reflected in the good will factor and not the equipment value. This value, which is used in determing the value of a business, is usually somewhere between replacement cost and book value.